Tuesday, January 19, 2021

Choppies stock tumbles as cross-border shareholders battle continues

The Choppies group, Botswana’s leading mass grocery retailer and emerging regional player in the fast moving consumer goods is going through a mammoth task to appease and retain its investors from both fronts in the local bourse and the Johannesburg Stock Exchange.

Choppies stock which over six months ago traded at 245thebe is now finding itself crawling at 170thebe in the BSE, and 170cents in the JSE. The famous local retail does not feature in the best performing stocks neither in the BSE nor the JSE at the moment.

The Company is currently on a closed period preparing its financial results for the year ended 30th June 2018, to be published on or about 26th September 2018.

Looking into the situtation, Motswedi Securities Research analyst, Garry Juma shared that, the Choppies share price is going through some bearish market conditions, both in the Botswana Stock Exchange and the JSE.

The Company is also still battling with a court case in which one of its former non executive Directors, Siqokoqela Mphoko, the son of the former Vice President of Zimbabwe Phelekezela Mphoko has been defrauding the Choppies company though its outlets in Zimbabwe under the pretence that he is still a director, therefore entitled to take money from the company via tills.

Could this perhaps be also contributing to the downfall of the stock, and now investors may lose their confidence in the fast mushrooming supermarket, Juma comments that, “that has certainly affected some sentiments but the business is still solid. Emerging markets at large are under bloodbath.”

Choppies entered the Zimbabwean market in 2013 in a partnership between a local investment Nanavac which had a 51 percent stake jointly owned by Mphoko and his son Siqokoqela and, Botswana’s listed which is backed by the country’s former President Festus Mogae with a 49 percent stake.

To date the supermarket chain has 32 operational shops across the country.

Mphoko seems to have lost grip of the business since former president Robert Mugabe was toppled by the military last November in a coup.

Botswana’s supermarket chain store half-year (31st December 2017) profits rose 19 percent, buoyed by an improved performance at its South African operations, the company.

The retailer, with operations in seven African countries, posted headline earnings per share (HEPS) of 5.36 thebe (cents) compared with 4.52 thebe for the same period a year ago. HEPS is the main profit measured used which strips out certain once-off items.

Botswana contributed 40 percent to Group revenue. Despite the subdued economic environment in the country, the company maintained its market share and continued to improve its efficiencies, according to CEO Ram Ottapathu and Chairman Mogae.

Revenue from the firms South African operations grew 43 percent for the period, boosted by an improved performance at its stores in the country’s North West province.

Choppies, which has 82 stores in South Africa, has in the past suffered losses in mining towns in the North West province which have been hit hard by lay-offs.

In the six months to December 2017, Choppies opened 33 new stores bringing its total number of stores to 235 in Africa.

In SA, Choppies operates in a market where over the last months, the rand has been under pressure against the dollar weighing lower than expected. The country is also going through some technical recession, which might also affect the group’s revenue in the next reporting period.

The rand firmed by 1.6 percent against the dollar this week Thursday after Turkey’s central bank hiked interest rates. The rand has been taking its cue from the movements of the Turkish lira in recent days, as SA’s fellow emerging markets battle economic difficulties. 

Thursday afternoon the Turkish central bank said its monetary policy committee decided to increase the one week repo rate from 17.75 percent to 24 percent.

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